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“How is the German market potential for HDG likely to develop in the years to come, and which factors will be key drivers of this development? And how can HD & HDG improve their approach
to developing strategies to ensure profitability in their foreign subsidiaries?”
It is the author’s belief that the below findings have served the purpose of the report to a satisfactory degree, yet a self-critical discussion has been added to the end of this final conclusion.
The initial analysis of this report revealed and analyzed the most important macro environmental factors and offered a forecast on the future of the key uncertaintities discovered, through an impact and probability analysis. It was established that the energy-political scene was, is and will be the key environmental factor. This is due to the many subsidy programmes that are put in place and almost constantly being adjusted, to reach the various targets from the announced climate, economic and energy goals.
The current political crisis between the EU and Russia, is believed to be a key factor in deciding the future outlook of this environment, and indifferent to how this crisis will end, the reduction of Germany’s energy dependency on Russia is high on the political agenda.
The economic environment placed emphasis on explaining the relationship between these subsidies and the consumer energy prices, and the balance act the German government has to overcome by satisfying private consumers demand for stable electricity prices as well as their large industrial sectors demand for low whole sale prices.
The public support was briefly discussed in the social/cultural environment analysis, and it was concluded that the public support for the Energiewende remains very high.
The final technical environment analysis placed emphasis on unveiling the increasingly important role of CHP plants in Germany, which with the increased political focus on energy efficiency, is targeted to supply 25 % of the total energy consumption in 2020, from approximately 15 % today.
The market potential analysis was separated into two sub-markets of electricity and heating. It was quickly concluded that the dominating suppliers to the electricity industry is likely to be the PV and wind industry, with waste and residue biomass products being promoted as the main biomass contributor. The author therefore concluded the German electricity sector offers only limited potential for HDG.
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Instead, the attention of the report was directed onto the heat industry in Germany. The
Energiewende has, as shown in the problem identification chapter, affected the heat industry at a slower pace compared to the electricity industry. However, with the recent add-on of expansion incentive programmes in the heat sector as well as the looming Ukraine crisis, these factors are all very likely to transmit into the heating sector and increase the market potential for HDG here.
It was established that HDG can segment their target groups into three categories of: “The Big Four” utility companies, the local and typically municipality owned CHP plants and the last group is the vast amount of privately owned small-scale biomass heating installations.
A slightly amended box model analysis was created, to illustrate how HDG are currently not able to attract the attention of the “right” people in their customer’s organization.
The competitive environment analysis resulted in the following observations:
Bargaining power of suppliers: HIGH
Threat of new entrants: MEDIUM
Threat from competing interest groups: VERY HIGH
Bargaining power of customers: MEDIUM-HIGH
Threat of substitute products: LOW-MEDIUM
Finally the high-growth market risk-analysis uncovered some important risk factors for HDG to consider, but the analysis did also reveal a potential for HDG to become the superior competitor in the market, by drawing on their extensive synergetic full-supply chain services from their Danish organization.
In the final sub-analysis the author initially argued why the concept of strategic market management is a perfect fit for HD & HDG in Germany.
After this argumentation, the focus turned onto an internal analysis of HD & HDG, where recommendations were given on how non-financial performances can be measured and it was also recommended for HD to take a critical look at the successes and failures of previous strategies.
The report took a critical view at the organization of HD and established that certain weaknesses and constraints do exist in HD & HDG, and these are value to be hindering the performance of the German as well as other international subsidiaries.
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Next the report weighed the strengths in HD & HDG, and several current competitive advantages were unveiled, as well as potential future advantages. The most imperative SCAs for HD & HDG, is their unique synergy with partnering subsidiaries through the umbrella like cooperation of Hedeselskabet.
Finally the report offered a concrete and practically applicable recommendation on striving towards a market strategy, which purpose is to create further SCAs and increased synergy within the organization.
13.1.1. Discussion
Though the report has sustained and confirmed the support for the author’s perceived notion of Germany being an attractive high growth market for HDG, the author does critically acknowledge that the uncertainties surrounding this market are almost indescribably imperative in the shaping of the future market for energy in Germany.
An argument from an opposing perspective could be, that HDG would be better of in ignoring the German market, till the “Seas have calmed” and the marketplace is no longer dominated by fluctuating subsidy programmes and radical political decisions such as the nuclear phase out are unlikely to happen.
However, while acknowledging the background for this consideration it is the author’s strong belief, that if HD & HDG are able to exercise the concept of strategic market management to a high standard, no marketplace is too difficult to navigate within and with their unique synergy SCA, they are quite possibly able to fulfil their overall visionary strategy of becoming market leaders in Germany, just like in Denmark.
To increase the standard of their strategy planning process, it is imperative that HD conducts the recommended comprehensive customer loyalty and satisfaction survey as well as an in-depth analysis of their competitors.
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